U.S. Stocks Gain on Consumer Confidence, Italy; Euro, Oil Climb
Nov. 11 (Bloomberg) -- Stocks rallied, preventing a second straight weekly decline for the Standard & Poor's 500 Index, and commodities climbed as U.S. consumer confidence improved and Europe took steps to address its debt crisis. Italy's bonds gained and oil reached a three-month high.
The S&P 500 jumped 1.9 percent to close at 1,263.85 at 4 p.m. in New York, pushing it up 0.8 percent for the week and 0.5 percent in 2011. The MSCI All-Country World Index added 2.2 percent after falling 3.1 percent in the previous two days. The euro appreciated 1.1 percent to $1.3752, while the dollar slid versus 16 major peers. Italian 10-year bond yields declined 44 basis points to 6.45 percent. Oil rose to almost $99 a barrel, capping the longest streak of weekly gains since 2009.
U.S. equities extended an early rally after a gauge of consumer sentiment topped estimates in November, reaching the highest level since June and bolstering optimism before the holiday shopping season. Italy's Senate approved debt-reduction measures, paving the way for a new government led by former European Union Competition Commissioner Mario Monti, while Greece swore in Lucas Papademos to head a unity government.
"It's like investors hit the keystroke to risk on," Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion, said in a telephone interview. "The European situation is seemingly coming to some closure and a decent consumer confidence report brought investors to risk assets."
The S&P 500 rose for a second day, adding to yesterday's 0.9 percent advance that was triggered by a drop in jobless claims and a retreat in Italian bond yields from records. The S&P 500 has rebounded about 15 percent from a 13-month low on Oct. 3 as the Citigroup Economic Surprise Index for the U.S., which gauges whether data is beating or trailing estimates, climbed to a seven-month high.
Disney Surges
Walt Disney Co. rose 6 percent to lead the Dow Jones Industrial Average higher after fourth-quarter earnings exceeded estimates on growth in cable TV and U.S. resorts. Bank of America Corp. and Alcoa Inc. also rose at least 3.4 percent, helping lead the Dow up 259.89 points, or 2.2 percent, to 12,153.68.
About 6 billion shares changed hands on all U.S. exchanges, the slowest trading session since July 25. Treasury trading was closed for the Veterans Day holiday.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 64.2 this month, the highest since June, from 60.9 in October. The median estimate of economists surveyed by Bloomberg News called for a reading of 61.5.
The Stoxx Europe 600 Index climbed 2.4 percent as all 19 industries advanced. A gauge of European banks rebounded 3.6 percent following two days of losses as BNP Paribas SA of France and the Royal Bank of Scotland Group Plc jumped more than 5 percent. Telecom Italia SpA gained 5.3 percent after third- quarter profit beat analysts' estimates.
Yield Spreads
The extra yield investors demand to hold Italy's 10-year debt instead of German bunds, Europe's benchmark government securities, dropped 55 basis points to 456 after climbing to a euro-era record 575 basis points two days ago. The French-German spread narrowed 19 basis points to 150 after S&P corrected an erroneous message to subscribers yesterday that suggested the nation's AAA credit rating had been lowered.
The Greek two-year yield rose to a record of 111 percent. The cost of insuring European sovereign debt fell, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments dropping 12 basis points to 333.
The euro strengthened against 12 of its 16 major counterparts. The U.S. currency fell against all 16, with the Dollar Index dropping 1 percent.
Crude oil rose 1.2 percent to $98.99, the highest since July, and capped a sixth straight weekly advance. Copper climbed 2.7 percent, the most in two weeks, to $3.4635 a pound. China, the biggest buyer of industrial metals, will focus on domestic growth to boost the world economy, Vice Finance Minister Wang Jun said in Honolulu.
The MSCI Emerging Markets Index rallied 1.8 percent, with Brazil's Bovespa surging 2.1 percent. The Hang Seng China Enterprises Index in Hong Kong advanced 1.3 percent, Hungary's BUX jumped 4.4 percent and Brazil's Bovespa gained 2.1 percent. The Kospi Index rose 2.8 percent after South Korea left interest rates unchanged, while India's Sensitive Index lost 1 percent as the nation's factory output slowed. Funds investing in developing-nation stocks took in $2.1 billion in the week ended Nov. 9, Citigroup Inc. said, citing data compiled by EPFR Global.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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